Court of Justice of the European Communities (including Court of First Instance Decisions)

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URL: http://www.bailii.org/eu/cases/EUECJ/1969/C4564_rev.html
Cite as: [1969] EUECJ C-45/64

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IMPORTANT LEGAL NOTICE - The source of this judgment is the web site of the Court of Justice of the European Communities. The information in this database has been provided free of charge and is subject to a Court of Justice of the European Communities disclaimer and a copyright notice. This electronic version is not authentic and is subject to amendment.

61964J0045(01)
Judgment of the Court of 19 November 1969.
Commission of the European Communities v Italian Republic.
Case 45-64.
European Court reports 1969 Page 00433
Danish special edition 1969 Page 00115
Greek special edition 1969-1971 Page 00157
Portuguese special edition 1969-1970 Page 00167

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IN CASE 45/64
COMMISSION OF THE EUROPEAN COMMUNITIES, TAKING THE PLACE OF THE COMMISSION OF THE EUROPEAN ECONOMIC COMMUNITY IN ACCORDANCE WITH ARTICLE 9 OF THE TREATY OF 8 APRIL 1965 ESTABLISHING A SINGLE COUNCIL AND A SINGLE COMMISSION OF THE EUROPEAN COMMUNITIES, REPRESENTED BY ITS LEGAL ADVISER, GIUSEPPE MARCHESINI, ACTING AS AGENT, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICES OF ITS LEGAL ADVISER, EMILE REUTER, 4 BOULEVARD ROYAL,
APPLICANT,
V
ITALIAN REPUBLIC, REPRESENTED BY ADOLFO MARESCA, MINISTER PLENIPOTENTIARY, HEAD OF THE DIPLOMATIC LEGAL DEPARTMENT OF THE FOREIGN MINISTRY, ACTING AS AGENT, ASSISTED BY PIETRO PERONACI, DEPUTY STATE ADVOCATE-GENERAL, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE ITALIAN EMBASSY,
DEFENDANT,

APPLICATION FOR A RULING THAT, BY ALLOWING CERTAIN PRODUCTS OF THE ENGINEERING INDUSTRY EXPORTED TO OTHER MEMBER STATES TO BENEFIT FROM A REPAYMENT OF INTERNAL TAXATION WHICH CONTRAVENED ARTICLE 96 OF THE TREATY ESTABLISHING THE EUROPEAN ECONOMIC COMMUNITY EITHER BY REASON OF THE NATURE OF THE TAX OR OF THE METHOD OF REPAYMENT, THE ITALIAN REPUBLIC HAS FAILED TO FULFIL AN OBLIGATION UNDER THE SAID TREATY,

1 BY JUDGMENT OF 1 DECEMBER 1965, THE COURT FOUND INCOMPATIBLE WITH THE TREATY ALL REFUNDS CORRESPONDING TO DUTIES AND TAXES WHICH ARE IMPOSED NOT ON THE PRODUCTS BUT ON THE PRODUCER UNDERTAKINGS AS SUCH AND RECOGNIZED THAT, IN ADDITION, THE REPAYMENT AT ISSUE TENDED TO REIMBURSE INTERNAL TAXATION WHICH WAS WITHOUT QUESTION IMPOSED DIRECTLY OR INDIRECTLY ON THE PRODUCTS AND WAS THEREFORE OF THE TYPE ENVISAGED BY ARTICLE 96 . HOWEVER, TAKING INTO ACCOUNT THE CHARACTERISTICS OF THE FLAT-RATE SYSTEM CHOSEN BY THE ITALIAN REPUBLIC FOR THE CALCULATION OF THE SAID REFUNDS, THE COURT IMPOSED ON THE DEFENDANT THE BURDEN OF PROVING THAT THE AMOUNT OF THE REPAYMENTS AT ISSUE CONFORMS IN ALL CASES TO THE REQUIREMENTS OF ARTICLE 96 .
2 FOLLOWING THE JUDGMENT OF 1 DECEMBER 1965 THE ITALIAN GOVERNMENT SENT TO THE COMMISSION A SERIES OF ANALYTICAL CARDS RELATING TO 58 OF THE 473 PRODUCTS ON WHICH EXPORT REFUNDS WERE MADE, AS WELL AS A NUMBER OF GENERAL SURVEY TABLES AND AN EXPLANATORY MEMORANDUM .
3 THE COMMISSION CONSIDERED THESE DOCUMENTS TO BE INCONCLUSIVE AND REQUESTED DATA FROM THE ITALIAN GOVERNMENT ON SEVEN PRODUCTS WHICH IT HAD CHOSEN AS BEING PARTICULARLY REPRESENTATIVE . THE DATA SUPPLIED ON THESE PRODUCTS AND, MORE PARTICULARLY, ON ONE OF THEM, WERE CHECKED BY THE COMMISSION WHICH, FOLLOWING THESE INVESTIGATIONS, CONTESTED THE TAKING INTO ACCOUNT, IN THE CALCULATION OF REFUNDS, OF A SUBSTANTIAL PART OF CUSTOMS DUTIES LISTED IN THE TABLES SUPPLIED BY THE ITALIAN GOVERNMENT .
4 AS REGARDS THE INTERNAL TAXATION, THE COMMISSION ACCEPTED THE FIGURES RELATING TO TAXES ON MANUFACTURE AND CONSUMPTION PAID BY UNDERTAKINGS MANUFACTURING FINISHED PRODUCTS, AND MERELY MADE A NUMBER OF OBSERVATIONS ON THE ITEM " ELECTRIC ENERGY ".
5 THE COMMISSION DID HOWEVER EXPRESS STRONG RESERVATIONS REGARDING THE INCLUSION, IN THE CALCULATION OF THE AMOUNT OF REFUNDABLE TAXATION, OF TAXES PRESUMED TO HAVE BEEN PAID BY THE SUPPLIERS OF UNDERTAKINGS MANUFACTURING FINISHED PRODUCTS; THIS RESERVATION RELATED BOTH TO THE ACTUAL IMPOSITION OF THOSE CHARGES IN THE CASES EXAMINED AND TO THE EXTENT TO WHICH THEY ACTUALLY AFFECTED THE PRODUCTS USED IN THE FINAL PROCESSING STAGE .
6 THE APPLICATION WAS BROUGHT BY THE COMMISSION ON THE BASIS OF ARTICLE 96 OF THE EEC TREATY WHICH PROVIDES : " WHERE PRODUCTS ARE EXPORTED TO THE TERRITORY OF ANY MEMBER STATE, ANY REPAYMENT OF INTERNAL TAXATION SHALL NOT EXCEED THE INTERNAL TAXATION IMPOSED ON THEM WHETHER DIRECTLY OR INDIRECTLY ".
7 THIS PROVISION, WHICH RELATES ONLY TO INTERNAL TAXATION, DOES NOT PERMIT ACCOUNT TO BE TAKEN, FOR THE PURPOSES OF THIS DISPUTE AND IN ORDER TO ESTABLISH WHETHER THE REPAYMENTS AT ISSUE ARE JUSTIFIED, OF THE AMOUNT OF CUSTOMS DUTIES . THIS FACTOR MUST THEREFORE BE EXCLUDED IN THIS CASE, SINCE THE ONLY CHARGE WHICH CAN BE TAKEN INTO ACCOUNT IN APPRAISING THE COMPATIBILITY WITH THE TREATY OF THE REPAYMENTS AT ISSUE IS THE EFFECT, WHETHER DIRECT OR INDIRECT, OF INTERNAL TAXATION PROPERLY SO-CALLED .
8 AS REGARDS THE LATTER, THE COMMISSION HAS ACCEPTED, WITH THE EXCEPTION OF A SINGLE ITEM WHICH IS RELATIVELY UNIMPORTANT, THE ACCURACY OF THE FIGURES PROVIDED BY THE ITALIAN GOVERNMENT RELATING TO TAXATION PAID DIRECTLY BY UNDERTAKINGS MANUFACTURING FINISHED PRODUCTS .
9 AS FOR THE TAXATION PAID BY SUPPLIERS OF UNDERTAKINGS MANUFACTURING FINISHED PRODUCTS, IT MUST BE STATED THAT THE POSSIBILITY OF SUCH INDIRECT CHARGES CANNOT BE EXCLUDED SINCE THE COMMISSION MERELY INVOKED THE IMPOSSIBILITY OF CHECKING, IN THE CASES EXAMINED, THE EXISTENCE AND AMOUNT OF THESE CHARGES BY REASON OF THE FLAT-RATE SYSTEM APPLIED BY THE ITALIAN AUTHORITIES .
10 IT FOLLOWS FROM THE EVIDENCE SUPPLIED BY THE ITALIAN GOVERNMENT, REGARD BEING HAD TO THE CRITICAL OBSERVATIONS DRAWN UP BY THE COMMISSION, THAT WHEREAS IN CERTAIN CASES THE AMOUNT OF THE REPAYMENTS DOES NOT EXCEED THE AMOUNT OF THE TAXATION REFERRED TO BY ARTICLE 96, THE SYSTEM LAID DOWN BY ITALIAN LAW LEADS IN OTHER CASES TO REFUNDS WHICH EXCEED THE SAID AMOUNT .
11 IT APPEARS THEREFORE THAT THE SYSTEM ESTABLISHED BY THE ITALIAN LEGISLATION DOES NOT GUARANTEE THAT REPAYMENTS IN ALL CASES REMAIN WITHIN THE LIMITS FIXED BY ARTICLE 96 .
12 IN THESE CIRCUMSTANCES, AND REGARD BEING HAD TO THE UNCERTAINTY CREATED BY THE EXISTENCE IN THE CALCULATIONS OF FACTORS WHICH IT IS IMPOSSIBLE FOR THE COURT TO ASSESS IN THE CONTEXT OF THE PRESENT DISPUTE, IT IS INCUMBENT UPON THE ITALIAN GOVERNMENT, IN COOPERATION WITH THE COMMISSION, TO TAKE THE MEASURES NECESSARY TO ENSURE THAT THE REFUND SYSTEM CONSTITUTING THE SUBJECT OF THE DISPUTE IS MADE TO CONFORM WITH THE REQUIREMENTS OF THE TREATY .

13 UNDER THE PROVISIONS OF ARTICLE 69(2 ) OF THE RULES OF PROCEDURE THE UNSUCCESSFUL PARTY SHALL BE ORDERED TO PAY THE COSTS .
14 THE DEFENDANT HAS FAILED IN ITS SUBMISSIONS .
15 THE COURT IN ITS JUDGMENT OF 1 DECEMBER 1965 HAS ALREADY ORDERED THE DEFENDANT TO PAY HALF THE COSTS, RESERVING ITS JUDGMENT ON THE REMAINDER . ACCORDINGLY, THE DEFENDANT MUST BE ORDERED TO BEAR ALL THE COSTS OF THE ACTION . BEAR ALL THE COSTS OF THE ACTION .

THE COURT
HEREBY :
1 . DECLARES THAT, BY MAINTAINING IN FORCE AFTER 31 DECEMBER 1963 A STATUTORY SYSTEM WHICH MAY LEAD TO THE PAYMENT, TO THE ADVANTAGE OF PRODUCTS OF THE ENGINEERING INDUSTRY EXPORTED TO OTHER MEMBER STATES, OF REPAYMENTS OF INTERNAL TAXATION EXCEEDING THE TAXATION IMPOSED DIRECTLY OR INDIRECTLY ON THE SAID PRODUCTS, THE ITALIAN REPUBLIC HAS FAILED TO FULFIL ITS OBLIGATION UNDER ARTICLE 96 OF THE TREATY;
2 . ORDERS THE DEFENDANT TO BEAR THE COSTS OF THE ACTION, INCLUDING THE COSTS RESERVED BY THE JUDGMENT OF 1 DECEMBER 1965 .